What are the limitations of portfolio management?

Answer 1

Portfolio management service is a huge business today. There is stiff competition which makes it difficult for the investor to choose a good manager. However, this can be sorted out by taking his previous history and performance into account. One limitation faced, is the authority given to the manager to have control over your investments. When we ourselves, manage and trade, it's a different scenario altogether. However, trusting a portfolio management advisor is difficult and risky as well. There are many known cases of churning, where the consultant shifts investment from one fund to another. Some investors restrict this practice by limiting the commission to the consultant depending on his performance; however, if there is a loss, it wouldn't matter much to them. All in all, the professional brokers are very efficient and the process and detailing is strong, since the amount invested is big. I would suggest you look for good brokers and ask them about their ways of functioning; also check their credibility.